Gas stations have started to close in Russia amid fuel crisis

Gasoline filling stations (FFS) in Russian regions have become victims of the fuel crisis that has erupted. Due to record exchange prices for fuel, fuel shortages and delivery problems, they have started to close.

“Indeed, there have been cases of gas station closures, entrepreneurs are facing a situation when it becomes simply unprofitable to keep gas stations,” Aleksandr Vakhrushin, director of the Standard Oil network in Nizhny Novgorod Region, told Izvestia.

Independent filling stations are also closing down in Krasnodar Krai, a key agricultural region of the country. “Some customers who bought equipment from us have had to stop work at their filling stations. Some clients stopped construction of new filling stations because fuel trading became unprofitable for them”  explained Eduard Animayev, General Director of EdAn Engineering LLC, owner of the NARA brand of filling station equipment.

Representatives of the fuel business warned local authorities about the risk of gas station closures in the Novosibirsk region back in early September. “About 15% of the market participants have insignificant fuel stocks, while the rest work “from wheels”, said Sergey Latskikh, head of the regional branch of the Russian Fuel Union.

Pavel Bazhenov, president of the Independent Fuel Union, confirms that gas stations are closing in southern regions and in remote communities. However, he claims that there is no talk of mass closure of gas stations.

“The reason for gas stations’ shutdown was either temporary supply disruptions due to logistical problems or financial difficulties that arose for small fuel companies due to the pronounced disparity between wholesale and retail prices”, Bazhenov explained.

Despite the record growth of exchange prices for motor fuel, the authorities are restraining the growth of prices in retail, complain the participants of the fuel market. They do it through the pressure of regulators, primarily FAS, on vertically integrated oil companies (VINK). Those, in their turn, can restrain price growth by redistributing profits and losses within the company. But independent filling stations are deprived of this opportunity.

“Disparity of wholesale and retail prices leads to the fact that the sale of fuel at independent filling stations becomes impossible. Putting prices on the stele higher by 5-7 rubles than those of a vertically integrated oil company leads to an exodus of buyers. Now many owners do not see the point in their work”, stated Igor Maslov, Deputy Chairman of the Expert Council of the All-Russian Competition “Filling stations of Russia”.

On the eve of the government imposed an indefinite ban on the export of gasoline from Russia. An exception was made only for deliveries to the EAEU countries, Abkhazia and South Ossetia, as well as for contracts implemented under intergovernmental agreements.

The tough measures were the result of more than a month of unsuccessful negotiations with oil companies, which were demanded to sell more fuel on the stock exchange to put out the “price fire”. From the beginning of the year to September 18, gasoline AI-92 in wholesale rose from 37.1 to 70.4 thousand rubles per ton; AI-95 – from 43 to 75.5 thousand rubles per ton. Diesel prices began to rise sharply since early July – from 51.9 to 73.7 thousand rubles per ton in mid-September.

By early fall, diesel and gasoline began to disappear from gas stations in the southern regions: Krasnodar Krai, Adygea, Astrakhan and Samara Regions, and Stavropol.

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